Braskem lowers Brazil PE prices on currency pressure: company source
By Phillipe Craig / Platts
Petroleumworld 03 04 2019
Brazilian petrochemical producer Braskem is lowering its domestic prices for polyethylene (PE) in March due to local currency devaluation, a company source said Friday.
Braskem's PE pricing in March has reduced by Real200/mt (around $53/mt) on all grades or "families" of PE, the source said.
"Point of attention is the upward pressure in the exchange rate in latest days," the source added.
Braskem will keep domestic prices for polypropylene (PP) stable this month as recent price trends in the Asian PP markets have mitigated currency pressure, the source added.
The Brazilian real weakened from an exchange rate against the US dollar of 3.7025 on February 14 to close the month at 3.7488, a difference of 1.3%, according to S&P Global Platts data.
Recent market feedback in Brazil centered on a possible March PE price cut from Braskem, with sources specifically pointing to elevated stocks in the region as a driving factor for weakened demand this year.
Falling import prices and an abundance of competitive US-origin PE were also responsible for falling demand, regional sources said this week. South American PE producers and import distributors were fighting for market share in Mercosur as buyers employed "conservative restocking strategies" while waiting out an import price floor, the sources added.
At least one other South American PE producer was heard lowering prices in Brazil, in line with Braskem's reduction, a market source said Friday. A US-based PE producer that regularly sells directly and through internal distribution channels in Brazil was also lowering prices by Real200/mt this month, the source added.
Import PE pricing in South America has been under sustained pressure since Q3 2018, coinciding with China's late-August implementation of a 25% tariff on US-origin high-density polyethylene (HDPE) and linear-low-density polyethylene (LLDPE).
With those key US-origin PE resins becoming uncompetitive in China, producers and traders spent much of the second half of last year looking for alternative export markets. The shift in tradeflows came at a time when the US was realizing record PE production tied to recent increases in regional capacity expansions, with LLDPE and HDPE dominating the first wave of additions and expansions.
Overall, CFR Brazil pricing has shed 17.1%-22.3% between September 5 and February 27, according to Platts data.
Domestic Brazilian prices, meanwhile, has come off by 27%-29.6% during that same time, while the local currency has strengthened against the US dollar by 9.6% in the last 18 months, according to Platts data.
The Brazilian domestic market was assessed lower across the board this week, with LDPE settling at Real5,000/mt and LLDPE closing at Real4,450/mt Wednesday. HDPE film, meanwhile, was assessed at Real5,100/mt after showing the biggest week-on-week decline at Real250/mt (around $67/mt), Platts data showed.
All domestic Brazilian assessments are made on a delivered basis into Sao Paulo (South and Southeastern Brazil) for material arriving by truck with a letter of credit of 28-35 days. The assessments are reflective of prices that include local PIS/COFINS taxes, per market feedback.
We invite you to join us as a sponsor.
Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories.
Story by Phillipe Craig from Platts / SPGlobal.
spglobal.com 02 28 2019
Hit your target - Advertise with us
PW 300.000 plus request per week
Copyright© 1999-2019 Petroleumworld or respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions Petroleumworld.com as the source.
Other stories you have to get authorization by its authors. Internet web links to http://www.petroleumworld.com are appreciated.
Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.
Write to firstname.lastname@example.org
By using this link, you agree to allow PW
to publish your comments on our letters page.
Any question or suggestions,
please write to: email@example.com
Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels